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El Salvador Greenlights First-Ever Bitcoin Bond

El Salvador Greenlights First-Ever Bitcoin Bond

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The world’s first-ever Bitcoin Bond has received regulatory approval in El Salvador and is expected to launch by the first quarter of next year. 

Regulatory Nod and Anticipated Launch

El Salvador, a staunch supporter of Bitcoin (BTC), has achieved another milestone as it gears up to introduce the world’s first Bitcoin Bonds, known colloquially as "Volcano Bonds." Regulatory approval for this groundbreaking financial instrument was granted by the Digital Assets Commission (CNAD), paving the way for a targeted launch in the first quarter of 2024.

The official announcement came on December 11 via (formerly Twitter), where the National Bitcoin Office stated, 

"The Volcano Bond has just received regulatory approval from the Digital Assets Commission (CNAD). We anticipate the bond will be issued during the first quarter of 2024. This is just the beginning for new capital markets on #Bitcoin  in El Salvador." 

Leadership Confirmation

The news was reinforced by President Nayib Bukele, a prominent advocate for BTC, who retweeted, confirming that the Bitcoin Bonds would indeed be issued in the first quarter of 2024. The issuance will take place on the Bitfinex Securities Platform, a trading site for blockchain-based equities and bonds registered in El Salvador. This development signifies a significant stride toward establishing new capital markets centered around Bitcoin in El Salvador.

Volcano Bonds: A Vision Originating in 2021

The concept of "Volcano Bonds" was introduced in 2021 by President Bukele following the country's historic move to recognize Bitcoin as legal tender. The legislative groundwork for the Bitcoin-backed bond was laid on January 11 of the same year. 

Designed to alleviate sovereign debt and finance the ambitious "Bitcoin City" project, the Volcano Bond aims to raise $1 billion. The funds will be allocated to nurturing a Bitcoin mining industry powered entirely by renewable energy, including that harnessed from El Salvador's active volcanoes.

Long-Awaited Approval  

The regulatory approval comes after nearly 21 months since the initial announcement, facing delays in execution. Former Finance Minister Alejandro Zelaya had initially projected a mid-March 2022 launch, but various postponements ensued. The legislative breakthrough occurred in late November 2022, when the digital assets bill was introduced in the Legislative Assembly, where Bukele's party, Nuevas Ideas, holds a substantial majority.

With the approval secured, El Salvador is on the cusp of ushering in Bitcoin-based capital markets. The Volcano Bonds, set to mature over a decade, will offer an annual return of 6.5% to bondholders, marking a pivotal moment in the nation's financial landscape.

Bitcoin Thrives in El Salvador

El Salvador's foray into Bitcoin extends beyond the realm of bonds. The country recently launched a $1 billion Bitcoin mining project, generating 241 megawatts of power. Leveraging its volcanic resources, specifically the Conchagua volcano, the initiative represents a strategic partnership with Luxor Technology.

With Bitcoin crossing the $40,000 mark for the first time in over a year, the country’s heavy BTC bet has paid off significantly. President Bukele, seeking re-election against this rally, demonstrates the potential synergy between Bitcoin adoption and economic growth.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice. 

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